Declining Kuwait Real Estate Transactions Raise Concerns

The real estate market in Kuwait has been experiencing a consistent decline in transactions, with prices following suit, especially in Asima and Hawally governorates, according to data from the Ministry of Justice. 

In the first half of 2023, the residential sector witnessed a significant 41 percent drop in the number of transactions, with only 1,526 deals (totaling KD 736 million) compared to 2,592 deals (totaling KD 1.75 billion) during the same period last year.

Despite the decline in transaction volume, the average value of each deal increased to KD 483,000 from KD 414,000 in 2022, reflecting a 16.6 percent rise. This indicates rising prices for private residences, particularly in Asima and Hawally, while prices in other governorates remained relatively stable. The investments sector also experienced a decrease, with 589 deals registered in the first half of 2023 compared to 687 deals in the previous year, marking a 14.2 percent decline.

Unlike the residential sector, the average value of transactions in the investments sector decreased by 9.8 percent, from KD 854,000 per deal last year to KD 770,000 this year. The commercial sector took the hardest hit, plummeting by 74 percent, with only 39 deals recorded in the first half of this year, compared to 111 deals in the same period in 2022. However, the average value of a single commercial deal surged from KD 3.513 million to over KD 5 million.

Looking ahead, investors and analysts are closely monitoring the actions of the American Federal Reserve, particularly whether they will continue to raise interest rates. The Kuwaiti market could potentially see a revitalization if the American interest rate stabilizes in the second quarter of 2024, resulting in a decrease in local interest rates. This could make real estate and the stock exchange more appealing to investors, drawing them back to these more robust markets.

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